Mr. Robert L. Stern, of Washington, D.C., for petitioner.

The Circuit Court of Appeals set aside a cease and desist order of the FederalTrade Commission upon the ground that certain findings were not supported byevidence. 6 Cir., 123 F.2d 34. The refusal of the court to enforce theCommission's order rested in part upon an interpretation of this Court's decisionin a prior controversy between the same parties. Federal Trade Comm. v.Raladam Co., 283 U.S. 643, 51 S.Ct. 587, 75 L.Ed. 1324, 79 A.L.R. 1191.Because of the importance of questions raised, we granted certiorari. 315 U.S.790, 62 S.Ct. 631, 86 L.Ed. -.

Section 5 of the Federal Trade Commission Act, 38 Stat. 719, 15 U.S.C. 45,15 U.S.C.A. 45, declares unfair methods of competition in commerce to beunlawful; empowers the Commission to prevent such methods; and authorizesthe Commission after hearings and findings of fact to issue orders requiringviolators 'to cease and desist from using such method of competition.' In 1929,the Commission, after hearings, found that the Raladam Company had usedunfair methods of competition in selling a preparation called Marmola bymaking misleading and deceptive statements concerning its qualities as aremedy for overweight. The Commission issued a cease and desist order whichthe Circuit Court of Appeals vacated. 6 Cir., 42 F.2d 430. This Court affirmedthe Court of Appeals' judgment saying that there was 'neither finding nor

evidence from which the conclusion legitimately can be drawn that theseadvertisements substantially injured, or tended * * * to injure, the business ofany competitor or of competitors generally, whether legitimate or not. * * * It isimpossible to say whether, as a result of respondent's advertisements, anybusiness was diverted, or was likely to be diverted, from others engaged in liketrade, or whether competitors, identified or unidentified, were injured in theirbusiness, or were likely to be injured, or, indeed, whether any other anti-obesityremedies were sold or offered for sale in competition, or were of such acharacter as naturally to come into any real competition, with respondent'spreparation in the interstate market.' Federal Trade Comm. v. Raladam Co.,supra, 283 U.S. pages 652, 653, 51 S.Ct. pages 591, 592, 75 L.Ed. 1324, 79A.L.R. 1191. It is clear that the reasons for refusing to enforce theCommission's order are grounded upon the inadequacy of the findings andproof as revealed in the particular record then before this Court. Hence, thesereasons are not controlling in this case, arising as it does out of differentproceedings and presenting different facts and a different record for ourconsideration.3

In 1935, the Commission instituted the present proceedings against Raladam,

charging unfair methods of competition in violation of Section 5 of the FederalTrade Commission Act. Hearings were held and much evidence was heardconcerning Raladam's trade methods since the date of the earlier cease anddesist order. This time the Commission found with meticulous particularity thatRaladam had made many misleading and deceptive statements to further salesof Marmola; that Marmola had many active rivals for the trade of those whowere interested in fat-reducing remedies; that Raladam's misleading statementshad the 'tendency and capacity' to induce people 'to purchase and userespondent's * * * preparation or medicine for reducing purposes * * * inpreference to and to the exclusion of the products of competitors, * * * and todivert trade to respondent from such competitors engaged in the sale ininterstate commerce of medicines, preparations, systems, methods, books ofinstruction, and other articles and means designed, intended and used for thepurpose of reducing weight.'

These findings were an adequate basis for the Commission's order. The courtbelow, however, was of the opinion that there was no substantial evidence tosupport the finding that the alleged unfair methods 'substantially injured ortended to injure the business of any competitor.' The evidence shows that salesof Marmola to the consuming public are made at retail drug stores throughoutthe country; that Raladam distributes Marmola both to wholesalers andretailers; that the wholesalers and retailers who sell Marmola also sellnumerous other remedies for taking off fat; that the essential fat-reducing

element in Marmola is desiccated thyroid, which is also an element in some of

the other remedies sold to the public with or without doctors' prescriptions; thatmany books of instruction on methods of reducing weight are sold in interstatecommerce; and that the gross sales of Marmola were from $350,000 to$400,000 a year. From this and other evidence the Commission concluded thatnumerous antifat remedies were offered for sale in the same market asMarmola, and that Marmola was in active competition with them for the favorof the remedy purchasing public.5

It is not necessary that the evidence show specifically that losses to anyparticular trader or traders arise from Raladam's success in capturing part of themarket. One of the objects of the Act creating the Federal Trade Commissionwas to prevent potential injury by stopping unfair methods of competition intheir incipiency. Fashion Guild v. Federal Trade Comm., 213 U.S. 457, 466,668, 61 S.Ct. 703, 707, 85 L.Ed. 949. And when the Commission finds as it didhere that misleading and deceptive statements were made with reference to thequality of merchandise in active competition with other merchandise it is alsoauthorized to infer that trade will be diverted from competitors who do notengage in such 'unfair methods.' Federal Trade Comm. v. Winsted Co., 258U.S. 483, 493, 42 S.Ct. 384, 385, 66 L.Ed. 729. The findings of theCommission in this case should have been sustained against the attack madeupon them.

Raladam contends here as it did before the Commission and the Circuit Courtof Appeals that the judgment of this Court in the first case makes the issueshere in controversy res judicata, and therefore bars these proceedings. It alsocontends that the denial by this Court and the Circuit Court of Appeals in theearlier proceedings of the Commission's motion to offer additional evidencewith respect to competitors and injury to competition should have a like effect.We think there contentions are without merit, and therefore agree with thecourt below in its determination that a decision on the merits was appropriate.

The respondent has not sought in this Court to sustain the judgment of the courtbelow on any other ground. Accordingly, the judgment is reversed withdirections that the order of the Federal Trade Commission be affirmed.